Following The Chancellor’s budget statement yesterday, Dominic Bourquin had this to say about its contents…..
The first word that comes to mind is “underwhelming”.
Philip Hammond’s second budget – and his first and last spring budget, as he moves to a single annual autumn budget from hereon – didn’t do a lot to impress.
The fundamental problem is that our financial problems are in the billions, which only allows the Chancellor wriggle room of millions when he’s handing out relief.
The fact is that our public sector borrowing is due to be £58 billion in 2017/18, and we’re currently paying £50 billion servicing our debt. That’s £5 billion more than our annual budget for defence and the police.
So when the Chancellor announces £435 million support on business rates, or puts aside an extra £216m for schools and £300m to support science and technology PhDs, the first thing that comes to mind is that in the grand scheme of things how little those amounts actually are in an economy with a GDP of around £1.9 trillion.
The business rates issue is a nettle that yet again the Exchequer has not grasped. There’s a bit of tinkering around the edges, with £1000 relief for the majority of pubs, and other small reliefs for certain businesses but all we’ve been promised beyond that is consultation between now and the next revaluation, which could be up to seven years away. The business rates system needs a complete overhaul, but unfortunately the bean counters have ducked the issue – again.
There’s more pressure on those who work for themselves, too, and as self-employed basic rate taxpayers see their national insurance contributions creep up from 9% to 10% in 2018, and up to 11% in 2019, we’re likely to see a shift to more Limited Company structures, although these bring their own additional costs.
Those businesses below the £83,000 VAT threshold have an extra year’s grace before they become liable for quarterly reporting, under the Making Tax Digital regime which will be of some comfort in the short-term. Yet it’s odd to see the tax-free dividend allowance fall from £5,000 to £2,000, just a few years after it was introduced.
And then there’s the really huge issue facing us as a country. The issue of health and social care. This is an issue so overwhelming that the Government is taking a short-term view for now, by putting some cash into social care for a couple of years – and publishing a green paper on longer term funding later this year. It sounds as if this has been put into the “too difficult to think about” box. Given the enormous financial strain that social care is likely to put on the UK over the next few decades, let’s hope that someone is brave enough to open the box fairly soon.
Finally, on International Women’s Day, some women may have something to celebrate. The Chancellor is setting aside £5m for “returnships” – cash to help people back into work after a career break. The reality is that it’s women who tend to take time out to care for children, so there are some crumbs of comfort there.
As I said, though, it’s small beer. And after all, the Chancellor’s got billions of other problems to worry about.
